Overview
The issues and potential liabilities for environmental matters continue to be top of mind for businesses in Canada, whether for daily operations or new projects. Environmental legislation (statutes and regulations) in Canada is enforced by three levels of government: federal, provincial/territorial and municipal.
Generally, it is an offence to discharge contaminants into the environment, and there are reporting obligations that must be complied with. Approvals are typically required for activities capable of impacting the environment, such as discharges to the atmosphere, land or water. It is an offence to cause or permit an unlawful discharge, fail to report in a timely manner, or fail to obtain a required approval, or not comply with its terms. Offences can result in significant fines and penalties against companies, as well as individuals. Projects can require the assessment of potential environmental impacts, particularly if there is government involvement (which can include the issuance of approvals, particularly at the federal level).
Federal & provincial legislation
The Canadian Environmental Protection Act, 1999 provides a framework for the federal government to regulate substances in Canada. It includes requirements relating to substances that are new to Canada and substances that are considered to be toxic, the reporting of information relating to the emission of certain pollutants into the environment, and the interprovincial and international movement of hazardous waste and recyclable materials. There is also federal legislation related to impacts on fish, the protection of species at risk and migratory birds, and other matters under federal jurisdiction.
Each province (and territory) has environmental protection legislation. For the most part, provincial legislation has the greatest day-to-day impact on business operations.
Typically, provincial legislation imposes requirements to obtain approvals for air or water discharges, and regulates contaminated sites (see below) and matters related to waste. There are many new and emerging initiatives across Canada related to the recovery/reuse of waste materials by producers and importers (eg, stewardship of recyclables, including electronics, etc).
Environmental legislation can impose significant penalties for infractions. Enforcement varies across the country, and within each province. In Ontario, maximum penalties can be as high as CAD10 million per day, and prison sentences are available. Some jurisdictions have introduced administrative penalties. There are also provisions that impose positive duties on officers and directors to take reasonable care to ensure their company complies with environmental law.
Municipal
Municipalities derive their power of jurisdiction from provincial governments. On the environmental front, in addition to planning, municipalities have traditionally regulated matters such as noise and sewers. The Supreme Court of Canada upheld a municipal by-law that prohibited certain pesticide applications, despite licences issued by the federal and provincial governments. Municipalities looking to expand their powers in this area have introduced by-laws, for example, that require businesses to report their use of toxic substances (community "right-to-know").
Contaminated property and brownfield opportunities
Provincial legislation, for the most part, regulates contaminated property, including the investigation and remediation of suspected or known contamination. This can involve orders that require work to be done. The provinces have adopted various criteria that are used to assess contamination. Some of the criteria are in legislation, while others are guidelines.
There are live issues related to who is responsible for historic contamination, and these cases increasingly go beyond "polluter pays" to include prior and current owners and persons with control of the property. This is an evolving area, as are the cases related to civil liability and class actions for contamination.
We continue to wrestle with ways to reuse properties that have gone into disuse, or are underused. Typically, these are urban sites. Buyers, developers and, most importantly, lenders were apprehensive about their involvement with such sites, fearing that they would attract liabilities. Brownfield laws encourage redevelopment by providing a certain level of protection to buyers and lenders, without giving absolute guarantees. It is helpful that risk assessment has become increasingly accepted to address contamination.
Aboriginal consultation
The Constitution Act, 1982 protects the aboriginal and treaty rights of aboriginal peoples. The duty to consult and, if appropriate, accommodate, arises when the federal or provincial government has knowledge of aboriginal or treaty rights or traditional uses of land that may be impacted by contemplated governmental action. The Crown's duty to consult exists independently from any statutory obligation or any regulatory process. The scope of consultation depends upon the right and nature of the potential impact.
Climate change
Existing climate change legislation includes federal and provincial greenhouse gas (GHG) reporting. Legislation requiring reductions in GHG emissions is less common, and compliance-based emissions trading exists only in Alberta. The federal government has developed GHG performance requirements (for vehicles, coal-fired electricity and soon the oil sands and other sectors). Alberta has implemented a GHG management system that incorporates obligations for large emitters to reduce emissions intensity, and provides trading in excess reductions and the use of and ability to trade offsets. Alberta is making up to CAD2 billion available for carbon capture and storage projects. British Columbia has a CAD30 per tonne carbon tax on CO2 emitted from the combustion of fossil fuels and is considering a cap-and-trade system. Québec has published a draft cap-and-trade regulation.
Sustainability
Although Canadian legislation does not expressly require the implementation of sustainability strategies, directors and officers of Canadian companies are required to act in the best interests of the corporations they serve. This encourages (and arguably requires) business leaders to think broadly about the opportunities and risks their companies face. Many Canadian investors and lenders have come to expect that companies demonstrate a strong and clear commitment to environmental sustainability.